The Environmental Regulatory Reforms Manufacturers Want Most

Husch Blackwell LLP
Charles E. Merrill

June 14, 2017

U.S. manufacturers and their trade associations have submitted comments to the U. S. Department of Commerce (DOC) on changes they would like to see in environmental regulations. President Trump’s Memorandum of January 24, 2017, “Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing”[1] directed the DOC to conduct outreach concerning the impact of Federal regulations on domestic manufacturing. This article reviews manufacturers’ responses to DOC on environmental issues.

The DOC sought input on:

The impact of Federal permitting requirements on the construction, expansion, or operation of domestic manufacturing facilities, and possible Federal actions to streamline permitting. Regulations that adversely impact domestic manufacturers, including compliance burdens for facility construction, expansion, or operation.[2]

DOC asked about the number of permits required; the time required to obtain permits; duplication or overlapping of permits; the most onerous features of permits; and suggestions for improvement of the permitting process. DOC received over 170 comments by its March 31, 2017 deadline on a wide range of federal regulations. The comments are available at: https://www.regulations.gov/docketBrowser?rpp=25&so=DESC&sb=commentDueDate&po=0&dct=P S&D=DOC-2017-0001.

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Monetizing Vacant Land Through Mitigation Banking

Sullivan & Worcester LLP
Jerome C. Muys, Jr.

June 13, 2017

A mitigation bank is a wetland, stream, or other habitat area that has been restored, established, enhanced, or (in certain circumstances) preserved for the purpose of providing compensation for unavoidable impacts to such natural resources. When a corporation or other entity undertakes these activities, it can generate “compensatory mitigation credits” (“CMCs”), which in recent years have significantly increased in value. Corporations and other owners of brownfield or dormant/underutilized properties are increasingly using these lands to create mitigation banks in order to generate CMCs that can be sold into the mitigation market.

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Waters of the United States Rule Update

Dinsmore & Shohl LLP
Anna Skinner

May 30, 2017

One of the first environmental measures the Trump administration took was issuing Executive Order 13778 directing the Environmental Protection Agency (EPA) to review and either rescind or revise the 2015 Clean Water Rule: Definition of “Waters of the United States” (WOTUS Rule). The WOTUS Rule was promulgated under the Clean Water Act (CWA), which defines the scope of CWA jurisdiction as “navigable waters of the United States.” The scope of “navigable waters of the United States” has been hotly debated in several court cases since the CWA was enacted. The WOTUS Rule sought to define which rivers, streams, lakes and marshes fell under the definition of “navigable waters of the United States.” See 80 Fed. Reg. 37054 (June 19, 2015). The WOTUS Rule took the approach of Justice Anthony Kennedy’s concurring opinion in Rapanos v. United States that navigable waters include any water body that has a “significant nexus” to navigable rivers and seas, including through biological or chemical connections. See 547 U.S. 715, 759 (2006).

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Administrator Pruitt Seeks Superfund Overhaul

K&L Gates
Cliff L. Rothenstein, Ankur K. Tohan, David L. Rieser and Kathleen L. Nicholas

May 30, 2017

In a May 22 memo, the Environmental Protection Agency (“EPA”) Administrator Scott Pruitt created a task force to look at ways of streamlining the Superfund program. The task force, to be led by senior advisor Albert Kelly, shall include the heads of “the Office of Land and Emergency Management, the Office of Enforcement and Compliance Assurance, the Office of General Counsel, EPA Region 3 (as the lead region for the Superfund program) and other offices as appropriate.” The initiative’s goals are to expedite the cleanup process and reduce the burden on compliant parties. Within 30 days, the task force is charged with providing a detailed set of recommendations on actions that the agency can take to:

  • streamline and improve efficiencies within the program;
  • overhaul or streamline incentives for private investment at sites;
  • improve risk-management and consistency in remedy selection;
  • “Utilize alternative and non-traditional approaches for financing site cleanups, as well as improvements to the management and use of Superfund special accounts;” and
  • improve stakeholder relations and reduce administrative costs.

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Pennsylvania Commonwealth Court Confirms “Continuous Trigger” for Latent Environmental Property Damage Claims

K&L Gates
John M. Sylvester and John M. Hagan

April 26, 2017

In a significant decision for Pennsylvania insurance law, the Pennsylvania Commonwealth Court has ruled that a “continuous trigger” of coverage applies to long-term, latent environmental property damage claims. Specifically, in Pennsylvania Manufacturers’ Association Insurance Co. v. Johnson Matthey Inc.,1 a unanimous panel of the court rejected an attempt by the insurer, Pennsylvania Manufacturers’ Association Insurance Company (“PMA”), to apply a “first manifestation” trigger of coverage for the environmental coverage claim of the policyholder, Johnson Matthey Inc. (“Johnson Matthey”), under “occurrence-based” policies that PMA issued to Johnson Matthey in the 1960’s and 1970’s. Rather, the Court observed that the record of the case presented a long latency of continuing, undetected property damage taking place during the PMA policy periods, which supported a continuous trigger throughout that latency period, such as that adopted by the Pennsylvania Supreme Court for asbestos bodily injury claims in its seminal decision, J.H. France Refractories Co. v. Allstate Insurance Co.2 The Commonwealth Court rejected PMA’s argument that a recent Pennsylvania Supreme Court decision, Pennsylvania National Mutual Casualty Insurance Co. v. St. John,3 which had applied a “first manifestation” trigger to a non-environmental property damage coverage claim, should be followed in this case.

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EPA Retracts CERCLA Remedy Selection Authority from Regional Offices for Remedies that Exceed $50 Million

Beveridge & Diamond PC
Pamela D. Marks, Steven M. Jawetz and Gayatri M. Patel

May 11, 2017

On May 9, 2017, EPA Administrator Scott Pruitt issued two new delegations under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) that limit to the Administrator (and possibly the Deputy Administrator) the authority to select remedies estimated to cost over $50 million. One delegation concerns Superfund sites generally; the other relates to federal facilities. Previously, all remedy selection was delegated to the Assistant Administrator for Office of Land and Emergency Management and the Regional Administrators. The authority to sign Records of Decision estimated to cost less than $50 million remains with those officials. A copy of the revised delegations and accompanying memorandum are available here.

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Leaking Underground Storage Tank Trust Fund: Petroleum Marketers Association of America Notes Omnibus Funding Level

Mitchell Williams Selig Gates & Woodyard PLLC
Walter Wright

May 9, 2017

The Petroleum Marketers Association of America (“PMAA”) addressed the funding level in the recently enacted Congressional spending package for the federal Leaking Underground Storage Tank (“LUST”) trust fund.

PMAA notes in a May 5th publication that the Omnibus Bill that funds the federal government through the fiscal year (September 30th) maintains the same level of funding as was provided in fiscal 2016 (i.e., LUST trust fund level at $91.9 million).

Congress created the LUST trust fund in 1986 to address petroleum releases from federally regulated underground storage tanks (“USTs”). The LUST trust fund provides money to:

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Coming of Age for Spill Act Liability: The State Is Not Considered a “Person” with Liability until after 1977

Riker Danzig Scherer Hyland & Perretti LLP
Alexa Richman-La Londe

May 10, 2017

Reprinted with permission. © 2016 Riker Danzig Scherer Hyland & Perretti LLP

Last month the New Jersey Supreme Court held that the State of New Jersey does not have cleanup liability for its actions that pre-date the 1977 enactment of the New Jersey Spill Compensation and Control Act (the “Spill Act”). NL Industries, Inc. v. State of New Jersey, (A-44-15)(076550)(Sup. Ct., March 27, 2017). This decision creates a disparity in liability for private parties, which have retroactive Spill Act liability, and the State, which does not. This case will certainly impact sites involving pre-1977 discharges where the State may have responsibility and now, as a result of this decision, will not have to contribute to the cost of the remediation. But, perhaps most striking about this decision is the Court’s rigorous application of the rules of statutory construction in reviewing the enactment of and amendments to the Spill Act. As a result, after a detailed and somewhat convoluted review, the Court said it could find no evidence that the Legislature clearly and unambiguously intended to abrogate the State’s sovereign immunity for pre-1977 discharges.

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Lost Insurance Policy? Pursuing Coverage for Long-Tail Environmental Liability Still Feasible

Beveridge & Diamond P.C.
John H. Kazanjian, Nicole B. Weinstein

April 20, 2017

Companies facing environmental cleanup liability typically confront claims that are brought multiple decades after the alleged polluting activity took place. This passage of time often results in the loss or disappearance of crucial historic documents, including insurance policies, necessary to respond to the claims.  Historic general liability insurance policies issued before pollution exclusions became commonplace in the 1970s are of particular value in protecting a company from exposure to “long-tail” environmental liability.  Finding these policies, or evidence of their existence, therefore is a must.  A recent New Jersey federal court decision serves as a helpful reminder that when the actual policies cannot be located, even limited documentary evidence of their existence, when buttressed by the expert testimony of a credentialed insurance archaeologist, may be sufficient to prove the coverage and facilitate recovery.

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Brownfields Reauthorization: U.S. House of Representatives Committee on Energy and Commerce (Subcommittee on Environment) Hearing Addresses Draft Legislation

Mitchell Williams Selig Gates & Woodyard PLLC
Walter Wright

April 7, 2017

The Subcommittee on Environment of the United States House of Representatives Committee on Energy and Commerce (“Subcommittee”) held a hearing on April 4th titled:

“Discussion Draft: Brownfields Reauthorization” (“Hearing”)

The focus of the hearing was the development of legislation reauthorizing the United States Environmental Protection Agency (“EPA”) Brownfield Program.

An additional objective was stated to be statutory improvements to the Brownfield’s aspect of the Comprehensive Environmental Response Compensation Liability Act (“CERCLA”).

EPA and most states (including Arkansas) have governmental programs addressing properties whose marketability has been impaired because of perceived or real environmental contamination issues. The interest in initiating reuse of idle properties is not limited to commercial development or industrial manufacturing facilities. For example, the impediments to the purpose and reactivation of abandoned mining or retail motor fuel properties might involve similar issues.

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